:
Thank you very much, Mr. Chairman.
I really appreciate this opportunity today to address your committee, and thank you to the committee members for inviting us.
[Translation]
First of all, I apologize for speaking English only. If you have any questions in French, I will try to answer them.
An hon. member: Try to make an effort.
Mr. Duncan McKie: All right, I will make an effort. My wife is from Val-d'Or so I have to speak French.
[English]
Thanks again.
The Canadian Independent Music Association, formerly known as CIRPA, has represented the interests of Canada's English-language domestic music production companies for 30 years. Today CIMA has over 170 member companies, including recording companies, music publishers, managers, agents, and other musical professionals from across the country.
CIMA is primarily concerned with the continued production and commercialization of English-language Canadian music and the support of the businesses and creative individuals who make Canada's music production industry unique in the world.
Canada produces some 2,000 new musical titles—that is albums in English—every year. This productivity has remained constant over the past several years despite the substantial issues faced by the industry with the advent of widescale file sharing. Canada has developed a system of regulated Canadian content requirements for radio, combined with financial supports from the Department of Heritage and others mandated by the CRTC to produce this outcome.
The Canadian system is much admired and often envied by other countries that did not have the foresight nor the political will to implement similar systems. Most of Canada's current musical production and most of the recent catalogue of musical works have been digitized and producers are aware of and are meeting the needs to distribute their works throughout the world in digital form with the correct formats and meta-data to allow the tracking of sales and distribution. This effort has been ongoing for some time, and it's beginning to show results as Canadian companies collect on international sales.
However, the digital age also brings with it a new means of promotion and a wide array of tools to encourage sales through creative marketing. It allows the media to access markets for new materials and makes worldwide distribution possible with considerably lower costs than in the physical world. Using social media and other tools makes it possible for our creators to connect in new and different ways with a much broader marketplace, and therefore brings Canadian creativity to a new audience.
The Canadian music industry has been one of the first of the cultural sectors to embrace this new reality and use it to our competitive advantage worldwide. The Canadian music industry has been one of the most innovative in developing a global marketing and distribution system, one where it's possible to sell Canadian content online in the newest and largest emerging marketplaces, like China and India and growing economies like Brazil, Russia, and Korea, as well as traditional marketplaces like the United States, the United Kingdom, and the European Union, where sales of recorded music are more robust, and in many cases improving.
Despite this progress, we are still hampered by widespread digital piracy in Canada, both at the level of individual consumers and on a more organized basis from P2P--peer to peer--sites, which operate without restriction. This has meant a well-documented, precipitous decline in domestic record sales. This decline has negatively impacted the ability of the domestic Canadian producers to create sufficient income to pay their debts and to reinvest in new materials, and most importantly, in Canadian artists and musicians.
Some pundits have suggested that this is only an issue that affects the largest players in the international music industry, but this is a fallacy and deflects attention from the Canadian situation, where small domestic players are more severely at risk than the international entertainment companies that operate in Canada.
Canadian sales of digital musical content are about half of that in the United States, and where Britain and Germany respectively have over 50 and 40 legal domestic download services, the Canadian number is less than half that, and many are simply white label copies of one another. And where mobility systems such as Nokia's come with music, and many others proliferate outside Canada, the Canadian market has been remarkably stagnant with respect to new music mobility services. We feel the lack of innovation in this area in this country is a major impediment to the expansion of sales opportunities for domestic producers.
In response to these challenges, domestically owned Canadian companies have become less dependent upon recorded music as a source of income and have developed other channels to create revenue. This new model, sometimes called the 360 business model or the holistic model, develops the artist's income potential through the sale of recordings in physical and digital form and includes revenue from publishing rights, TV and film licensing, live performances, and merchandise sales. Much of this business is done on the Internet and doesn't require a face-to-face business interaction. But at best, this is a promising transitional strategy, one that puts recorded music at risk and puts an enormous burden on the artist to tour.
Clearly that solution has its limits, and without some income from the recordings they produce, artists' careers will be short-lived, and the anticipated decline in recordings will certainly diminish Canada's reputation and cultural output.
Canada's creative industries must compete and succeed in a global marketplace. This is not news. But more than ever before, with the decline of the domestic market, success abroad will be critical to the long-term prospects of a musical act. At the same time, those countries where we are seeking access and success are increasingly active, using the same virtual tools the Canadians use to sell their materials and tours in North America.
European acts create their works and perform largely in English. MySpace pages representing foreign musical artists now number in the millions. Given this high level of competition, making a record and putting it out for sale on MySpace or YouTube just doesn't cut it. Where ten years ago a strong, independent Canadian artist might expect to sell 50,000 records in Canada, today 5,000 is considered exceptional. Award-winning acts will only sell 20,000 copies, at best, of their most recently released albums.
These numbers will not pay the bills. In the face of this limited success, Canadian acts are using public support and their own resources to tour abroad and to expand their audiences and create a market for their works. For example, as many as 350 Canadian musical acts might travel to Australia in any given year, and 140 might attend a South by Southwest music festival in Austin for three days in March.
This activity is critical to sustaining our industry. Although it may seem counter-intuitive that Canadians should perform abroad to sustain a cultural industry at home, we feel it is the only way we can continue to create sufficient commercial income to sustain our work. The more promising an act, if European and U.K. markets are examples of recent success, may foretell better prospects for Canadian popular music.
In order to continue to create and commercialize our popular music, governments at all levels must continue to invest in Canadian companies and artists, especially where access to foreign markets is concerned. As the organization most actively engaged in the development of music export opportunities, CIMA has led Canadian missions around the world. Our destinations include the U.K. and Europe, as far east as Bulgaria, Japan, China, Singapore, and Australia, South America, including Argentina and Brazil, and the United States, which continues to be our most important music export market.
With the help of the Ontario government we have engaged part-time representatives in London, Los Angeles, and Singapore to assist our companies and artists who wish to tour or sell in those regions. We provide an efficient and effective means of accessing these markets and supporting the Canadian musical brand in both languages.
We must thank the Department of Canadian Heritage for the ongoing assistance provided by the Canada Music Fund, and we can assure you that this assistance is used responsibly and productively. But more help is needed if we're to succeed in our goal of increasing Canada's worldwide music market share. In that light, benefits received in the form of copyright loyalties and levies, such as the private copying regime, will be critical to our ongoing success and should not be reduced or allowed to atrophy.
In the end, we should all remember that the success of Canadian music companies and their artists will be to every Canadian's benefit. Canadians recognize this and have always endorsed public sector support for their creative industries. Every Canadian takes great pride in the international success of artists such as Michael Bublé, Leslie Feist, Arcade Fire, Metric, and Bruce Cockburn. If you help us, we'll keep up the good work.
Thank you.
:
Thank you very much. I appreciate your inviting us here today.
My name is Don Quarles. I'm the executive director of the Songwriters Association of Canada. Je veux parler en anglais. I hope that's okay. My French is limited. Thank you very much for inviting us to speak.
Just as a quick summary, the SAC is a national non-profit arts service organization. We've been around for a little over 27 years. For the most part, we're advocates for Canadian songwriters, but we're mostly known for the educational work we do with aspiring songwriters right across the country. We've been very fortunate to be the beneficiary of some funding from Canadian Heritage, through the Canada Music Fund, via the SOCAN Foundation. We've been delighted to have been able to put on literally hundreds of events over the years that funding has existed.
Music file sharing is perhaps the most challenging problem facing the music industry, but at the same time it is potentially of enormous benefit to music creators and offers stakeholders a rare opportunity. I know that seems like a bit of a controversial statement, but it's something we certainly believe. We believe that music file sharing, once monetized, becomes its own solution, much as the case was with broadcasting when it was the perceived problem of the 1920s.
Netflix, the iPad, Kindle, and other devices and models are now providing significant legal alternatives for the film and book industries. Other cultural industries are working their way through the issues of the digital age, where one-size-fits-all does not necessarily work.
In the case of music, on the other hand, a decade after the advent of Napster, legal music services such as iTunes constitute less than 10% of music acquired over wired and wireless networks. The vast majority of performers and songwriters will never make a living on earnings from live performance, merchandise, and other sources.
There's a common myth that we hear these days: why not just hit the road and tour? Do 300 dates per year, sleep on floors, and drive a 12-year-old Ford Econoline van. You will still come back broke. That's usually the way it goes, not to mention, how do the songwriters who aren't in the band get paid, or the producer, or the recording studio, or anyone else for that matter? Yet millions of iPods, iPhones, and other music players are sold annually and tens of billions of songs are file-shared.
The SAC is a strong supporter of copyright. Really, we've looked at several different models and reached out to everyone who might be able to help with developing a solution, including sister creative organizations; labels, both indies and major labels; futurists; and international copyright experts. In the end, the SAC did what all great songwriters do: they take the best ideas and they put them into one.
The idea and solution were inspired by two tested and robust methods of monetizing copyrighted works. The first is the collective administration of performing rights, and the second is cable television. First of all, the performing rights method has been around for 160 years or more and going strong. Revenues—certainly in Canada—are up 40% in the same 10-year period that labels have seen a decline of almost 50%.
Similarly to performing rights, we propose that file sharing be licensed, not taxed or levied. The end user would be licensed; revenues would be pooled; and pro rata distribution, based on non-intrusive data collection, would be made to songwriters, performers, labels, and publishers. Consumers would continue to use the technology of their choice, such as BitTorrent, Gnutella, and social networking sites.
The other model, the cable television model, is where ISPs and mobile providers would become business partners. Basically, we could all access a choice of packaged content. One might argue that access and content have already been monetized. The bottom line is that we are hoping to bring that back to the creators.
There has been some discussion as to what you charge for something like this. It could be $1, it could be $5 a month. In order to give you some sense of the math, in Canada if it was $3 a month per household licence fee, that would generate upwards of $360 million annually. To put that in perspective, SOCAN, our performing rights organization in Canada, currently earns $250 million for performances. To compare that to the U.S., you could probably multiply that by ten and you would come up with a similar estimate.
There are other benefits for such a model--just in case you're worried about something other than money. Music file-sharing technologies offer a worldwide paid distribution system for creators at every level of accomplishment and every musical genre. For established creators, this model offers unprecedented global marketing and a distribution tool. For the aspiring writers, niche genres, and ethnic and aboriginal creators, it provides an opportunity to develop a global audience. Record labels aren't usually interested in this group yet, but they can still reach out and find an audience and make enough to keep developing their craft.
For record labels and music publishers, file sharing offers significant new and ancillary revenue streams. Their expertise in artist development, marketing, and promotion will be critical to the careers of emerging performers and songwriters.
Most artists and songwriters are trying to find a way to cut through the noise. That's always been the problem for artists and it still will be, and no one can help more than record labels.
ISPs can reduce their bandwidth costs, develop and participate in new synergies, and differentiate their services. They can store or cache popular songs on their own proprietary servers, develop their own portals, and sell value-added services, etc.
Ultimately, for the audience or the fans or those of us.... Sometimes we're referred to as users, consumers, or pirates. Unlike our colleagues at labels and publishing companies, songwriters and artists have a direct relationship with their audience. This audience likes what the artist is doing and therefore they've created a relationship. The point is we would like to give it to them and we would like to ensure that we get paid for it. It sounds like a win-win.
So for a reasonable monthly fee people continue doing what they're doing, no behavioural modification is required, and anti-infringement measures would finally make sense. According to a University of Hertfordshire study done in 2008, 80% of file sharers would pay for a legal way of doing so.
If you couldn't buy bread, you would have to steal it. It doesn't make sense to go after illegal file sharers until and unless you provide a legal option. If 80% are willing to pay and the other services, such as iTunes, are another 10%, now you're dealing with a 10% infringement problem and not a 95% infringement problem as we are today.
Like the clubs of Paris in the 19th century and the broadcasters in the 20th century, infringement has preceded licensing. Licensing these infringers led to innovation, growth, and great music.
Copyright owners are usually chasing users, not the other way around. And the notion that licensing will stifle innovation is simply not borne out by history. People have always shared music and they always will. Sharing music has always been a part of our culture. And those of us who make music are an essential part of that culture. We embrace it.
Those who work with us to monetize it will have a long--and we believe profitable--future ahead. The Songwriters Association of Canada, in concert with other creator groups, consumers groups, collectives, and rights holders, is working towards the initiation of a business-to-business pilot project to put these ideas to the test in the near future. We invite our colleagues and all stakeholders to explore exciting new options with us and we urge the standing committee to support this initiative in order to ensure that there will be a future for Canadian music creators.
Thank you for your attention and your consideration.
This is a fascinating discussion.
Mr. Quarles, you were in a 12-year-old Econoline van. Ours was 15 years old when we went on the road. It's interesting just saying that piracy destroyed the market. When we were 18 and we were on the road, we could play six nights a week. There weren't a lot of other options. It wasn't that we were a great band, but when we hit Waterloo people weren't on the Wii or doing ten million other things.
The market changed substantially through many factors. People drank a lot more in bars then. That was a substantial factor. They didn't hire bands because they wanted music; they hired bands to sell alcohol. We have a whole number of factors—demographic shift. We're left now, as you say, with a broken model. The old model is not coming back. We are going to have to find new opportunities.
I'm interested in your example, because we've had these technological threats in the past. In the early 1920s live musicians went after the recording industry. They said if you have records, people won't hire live musicians. The recording industry got set up and the recording industry said if you let radio come in, who is going to buy records? I was at the Future of Music Coalition meetings in Washington, and T Bone Burnett had a fascinating statistic. He said that by the late 1920s, record sales had dropped by 80%; by the early 1930s, it was 91%. Now, I'm sure the Depression had a huge part in that.
Did they outlaw radio? Did they put locks on it? They monetized the stream. Once they monetized the stream, they had found a new model.
With your option, Mr. Quarles, there have been attempts to try to do this: the SOCAN versus the association of Canadian ISPs. The court case ruled against SOCAN because they said the pipes themselves were basically dumb to what was within them, and you couldn't hold them liable unless they were made aware of copyright infringements.
Given the fact that the ISPs are now selling their own content--they're content distributors--they are also using deep packet inspection, so they actually have a very good sense of what's going through their pipes. Given the fact that tracking mechanisms like BigChampagne can track the BitTorrent traffic, do you think the case could be made, outside of a business-to-business model, where they might voluntarily sign on, but that the original judgment in SOCAN v. the Canadian ISPs might be overturned at this point because they can no longer say they don't really know what's being carried through the pipes?
:
Mr. Richards, I'd like to take a crack at your question.
When you look at the annual returns in music industries around the world, some are actually positive. That's a lesson for Canada—which ones are, and why. Sweden is one, as is the U.K., Australia, and Korea. It isn't all bad news.
One of the things these countries have is very aggressive infrastructure development in the mobility sector and ISP sector. That's something we don't have here--seriously. That's a real problem for Canada. We were one of the most advanced nations in the world 10 years ago in terms of connectivity, but are now lagging behind and rated 27th or 28th on the OECD ratings, both in terms of cost per person and bandwidth speeds. So we're in a bad position that way.
What the Ontario government is contemplating—I know you don't like to take lessons from Mr. McGuinty, “Premier Dad”—is setting up things like venture capital funds to support infrastructure development. Governments get paid back for these investments in the end, which are not just grants or loans. In Ontario's case, these are of a substantial size—$100 million, $150 million, to which our companies would have access and others who want to develop the Canadian infrastructure for distribution.
So when you only have 20 download sites and the Germans have 50, it doesn't take much imagination to figure out why it is they have a positive upswing in their digital music sales. They just have better and more distribution. We just don't have it. So our ISPs have been really lazy, having these managed monopolies, of course, and really lazy in setting up these opportunities for our distribution system.
So we have to look at all of that. I agree with Don that it's not just one thing; it's all these other things, but that's a critical component right now of our ability to recover sales.
:
Hi. I appreciate you inviting me down to speak. I read most of the reports that were created from the one that I believe you did back in April.
I should probably just give a bit of background about who I am. I am a proud Canadian, but I live and work in the United States. I left Canada in 2004 to go and work in the U.K., because I wanted to understand the mobile space and nothing was happening in North America. I had a TV production company and an advertising agency and, maybe wrongly, I tried to merge them. I thought there was a real opportunity, and it didn't work as well as I'd hoped. I left because the funding issues in trying to get TV shows off the ground were so difficult and so time-consuming that I just felt it would be better to go and look at something somewhere else.
I have a European passport and I went to Europe. I landed at Endemol, which is one of the world's biggest TV production companies. They do Deal or No Deal, Big Brother, lots of big TV shows, formats from around the world, a lot of reality.
I landed there, luckily, and at the same time Endemol was owned by Telefónica, which is giant Spanish conglomerate that also owned O2, which is the biggest mobile operator in the U.K. It was a very interesting experience to be inside a mobile operator, because I realized that nothing was going to happen for five or seven years; it was so archaic, so difficult to deal with, that we were dealing with the content people internally, and it really wasn't helping.
When I was at Endemol I saw an opportunity in 2005 to create a cross-media, or cross-platform, business development department. They managed to give me some money, I created it, and it was great for about a year. I left to come back to Canada for a few months, and then I went to work for a company in New York called Joost. This was probably one of the leading web video companies in the world, and they squandered $100 million in two years. They were the leaders. Unbelievable.
It was a great experience, I must say, but there was a lot of learning--a lot of learning. It was owned by the Skype guys, the guys who created Skype and Kazaa. So it was a peer-to-peer sharing network.
I just came in at 4 o'clock and heard you talking about BitTorrent and that sort of thing.
So when I was in New York I left Joost--I could see it was going downhill--and started Jumpwire, mostly because people kept asking me for strategy. Because of my background, because no one had the experience I had, I was becoming one of the leaders in the world at what I did. So I've gotten to work with Discovery, Indian companies, Australia, and Russia. We helped bring Hulu into Russia. It's been really exciting. We're only a year and a half old and it's been a real ride.
We just opened a Toronto office, because I am Canadian and I'm proud to be a Canadian. It's a really interesting time that's happening right now. I read through the study and some of the questions you asked. Unfortunately, I don't think I'll be able to address too many of them, because I haven't been in Canada long enough. But what I would like to say is that when I came back, I sat on a jury, just recently, for the CMF, because I wanted to understand where the funding had gone in the last five years. So I sat on the experimental jury that recently gave out a whole bunch of money. It was a really great experience, because I think this is the future of what funding should be in Canada. It was such a relief to come back and work on the funding side and see, “Here's a great idea. We'll get some innovative ideas in and then, you know what? We're going to take equity in them.”
VC is a big problem. I have to deal with VCs all the time. I'm looking for investment currently. It's a nightmare. To have the government involved as a VC seems questionable, but since I went through the process, I was really encouraged, because the shows, the innovative ideas that came through the experimental stream, were not about Canada. They were just good ideas.
That's where I want to focus the last few minutes of my presentation. I think the real future, that we talk about with our clients, is that if you're doing a five-year plan, you're probably not in your right mind. We don't really plan for any of our clients around the world more than 18 months out. Why? Because things change so quickly, there's absolutely no way. And for you, trying to build legislation around that....
I had an interesting discussion yesterday about the role of government in what's happening. Are you guys leaders? Are we supposed to lead the world, or are we supposed to lead from the middle, as everybody says?
I think what I came down to is that Canada has always led. When I left to go to the U.K. in 2004, we had 75% broadband penetration. When I went to the U.K., they had 50%. So 50% of their entire populace was on dial-up.
When I was in meetings, it was like I was from the future. I'd say that we tried that in 1998; it didn't work then and it's probably not going to work now. We have ten megabit down, and we've had it for five to seven years.
We led there, and we now lead in the most per-capita online video or web video watching. Canadians absolutely are so much higher than anyone else in the world, and yet we're not capitalizing on it. We're still spending time trying to determine how we can link it in with broadcasters.
At Jumpwire, essentially coming back into Canada in the last...I've given up. We do a lot of work with broadcasters, but the key problem I'm hearing right now is from production companies coming to me and saying that the broadcasters want all the rights. They want the rights, but they're not willing to pay for them.
So we've come up with a strategy, which I'll happily tell you. It's to go and get the rights for mobile, for online, for merchandising before you go to the broadcasters, then force them to ask you how much they're worth. It's difficult—I've also been on the broadcast side. How much are these things worth? But there are people making a lot of money out there, and I think that's important to acknowledge.
From our company's standpoint, in New York, I use the three territories that I spend a lot of time in very specifically.
The creative comes out of the U.K.. It's probably the most creative stuff I've ever seen in the world. They've had Shakespeare. They've got great training. You know, they use 40,000 words, we use 20,000.
When I sat in those development team rooms at Endemol, I saw probably the most innovative ideas ever. They cannot sell their way out of a paper box. There's just absolutely no way. But the Americans can. They're the best at it.
Here's what we started doing. When I built the cross-platform department, I said we're testing everything in Canada. Why? It's because it's the most diverse country in the world. If we want to do something for Korea, I can go to Koreatown in Toronto, I can buy up the billboards around it, I can test something in a very small market very quickly on a savvy audience. That's the way we work it, and it works quite well.
The three things I want to focus on, and we tell all our clients this, are data, web video, and mobile. For data, I have two key areas. I don't know whether you're focusing on these. Privacy is obviously is a big one, but there's also access. I want access to all the ISP data. I think I should have it. Can I get it under the freedom of information act? I don't know. Will they ever give it to me? Probably not.
But we built--we use BitTorrent--a $250,000 tracking machine. We're the leaders in the world in what we do. It's a filtering system. I have a Ph.D. on staff who tracks every TV show, every movie, all music in the world on BitTorrent, and we sell that information back to the content companies. And it is such a difficult sell: “I don't want to be associated with BitTorrent.” But I'm like, “This is what your people are doing; why don't you want to leverage that?”
So we have a long way to go, but there's a lot of opportunity here. I think that when you look at web video and how we lead the world, we need to capitalize on that. We need a fund specifically for that.
YouTube knows. We spend a lot of time with the guys at YouTube. Canada was the first place they opened a secondary office. Facebook, the secondary office was in Canada. Yelp, Twitter—you name it—they all come to Canada, because they cannot believe that this small country uses the Internet so much.
We're not the type of people to stand up and beat our chests and say we're number one. We just continually move ahead. But we are absolutely the laboratory for the world, and I don't think we're exploiting it. If you guys can help this, that would be helpful.
The final point for me--we can talk some more, and you can ask me some questions, if you want--comes down to the question of how do we leverage one of the most culturally diverse and digital-savvy countries in the world? That's what I want to do with my company, and I'm not really sure how to do it.
As we move forward, I'm not sure what my company is. Things are moving so quickly I can't get a handle on it. Anyone who says they can is definitely not being truthful, shall I say.
Thank you.
:
You have an IP address linked to your computer, and if you block that IP address, people can't necessarily determine where you are or who you are. A lot of people use this when they use BitTorrent or use streaming sites.
The real key here, and the reason I built my company this way, is that I could see five years ago that everyone was already paying for content: they were paying for it with their data. People have been paying for content for a long time. People think that data is not worth anything and that they can't monetize it. But actually, you can; we do it all the time.
What most people don't realize is that BitTorrent is a file-sharing service. Each person has a little bit on their computer. But the interesting thing is that the trackers that track all the BitTorrent traffic moving through are public. Anyone can grab this data—the government, companies like mine. You just have to have a very good filtering system. The person who built our filtering system happens to be a friend of the Bram who built BitTorrent. So we have the best filtering system in the world, no question.
But we also have a Ph.D. on staff who knows how to clean that data, because the data can be very messy. First of all, if you're downloading an episode of Being Erica, and it's episode one, and you can also download the entire season of Being Erica, most people will put that as one thing. You have to strip that out or filter it to make sure that you have two separate areas: how many people are downloading the whole season and how many people are just downloading one episode. This is what we talk about when we talk about filtering.
Going back to this whole idea that you're paying with your data, there is so much free data on the web right now. When you set up a Facebook fan page, if you're the person who sets it up, you get all the free data. It's all there.
If you look on any YouTube video and look beside the views, click on the down arrows and you will see nothing but data, free.
Most people say that's not monetizable. It absolutely is, and if we had an Internet connection I could show you right now all the free data that's out there, that we use all the time. And BitTorrent is the same way.
People say that people haven't been paying for their content. No, they haven't been paying for it with money, but they've been paying for it with something that's better than money—it's their data. I'm always a bit shocked when people say, “Well, that's not really money.” I'm like, “Yes, it is.”
We talk with lots of music people all the time, and there are a lot of indies.... The music business is in disarray, and anyone who comes in here is going to be upset: their entire business model has collapsed, and they've been trying to preserve it. And I don't blame them, but there are all these indies that are changing the way it's done now. I meet them all the time. These young guys are making....
I mean, how much money do you really need to make, as an artist, if you're doing it yourself? If you make a couple hundred thousand dollars a year and you live out in Fergus, Ontario....
An hon. member: Life's good.
Mr. Gavin McGarry: Life's good: in Canada, with free health care....
:
No, no, I'm not that republican; I'm an eco-capitalist.
There is a long history of artists being abused by large companies who...and I have to be very delicate here, because they are some of my clients. But there has been a long history of artists being abused by people who find a way to place barriers to entry, and then leverage that, and give the artists, or the sports celebrities, or whatever....
If a gentleman who plays basketball is making $100 million, I can guarantee you there's an owner who's making $1 billion. And it has always been that way.
But now it has shifted. The paradigm has completely changed. It's been disrupted. Everyone is running around like chickens with their heads cut off. And I get it. But now I meet all these bands who create their own content. They place it on YouTube. They monetize it themselves. They don't need record labels. They don't need the government. They don't need anybody. They do it themselves. With the Internet and the advent of mobile, it's a do-it-yourself entrepreneurial world, which is what artists started out being anyway.
My sister is a painter, an artist. I run the business side of what she does, and it's difficult. Artists are all over the place. There will come a time when they will require people to do business for them, but I'm noticing that most of them do it themselves. They find a friend who helps them out, and they make a lot of money.
Like, if you're 16 or 17 years old and you're making $10,000 a month, we have a bigger problem. How are all these giant multinational companies we build going to entice a 16-year-old to work for them for $500 a week? It's not going to happen.
I have that problem now. They're like, “Why would I want to work for you when I can make ten grand a month on YouTube?”
I spoke at Ryerson University two days ago. I was shocked at how many 22- or 23-year-olds in radio and television weren't making a thousand bucks a month on YouTube. I threw that out to them. I said, “Why aren't you making a $1,000 a month on YouTube?”
So I've sort of danced around your question because I don't want to be too controversial, but you obviously see what my side is. I'm like, no, we're going through one of the biggest revolutions since the Industrial Revolution. A lot of people, generally older, are pretty upset because their entire business models have collapsed, and they're just trying to get towards retirement.
You're seeing it happen. In New York eight weeks ago, every single one of the major publishing companies, including Condé Nast, changed their CEOs. Most of them were under 50.
You have to be able to speak both languages. I speak some French and a little English. When I go to Quebec I feel like an idiot. But when I'm talking about digital or analog, I am completely comfortable in both worlds. I have no problem. I can talk to very technical engineers about semantic web and cryptology--all the way up to CEOs of major multinational media corporations. That's my job. I am the guy in the hammock. I'm the age group that has to translate for both.
And that's the future: the future is that I'm not sure what's going to happen next.
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Well, this is very provocative.
You know, we've heard over the last few years, when people have come in, a lot of kicks at YouTube: “Oh, YouTube; it's people watching videos of their cat.” Obviously people really are shocked and horrified at what YouTube did. It changed.... It is television. My kids don't have televisions. They wouldn't think to buy a television if it was the last thing in the store available. They're on YouTube. But they're on YouTube through a wide variety of elements, and they're not watching people's cats flushing the toilet. They're watching content, because content is still king.
I'm interested in your experience with the CMF, because, you know, what is the role of the Canadian government? What is the role of our federal institutions? We created some really top-notch content creators. Take the National Film Board; to me, this is still one of the great film laboratories of the world. There's Radio-Canada. We created great content.
But it seemed over the years that the idea was that we had to create content because we had to make sure that Canadians didn't disappear. Then we had to create content so that the broadcasters didn't disappear. It was like culture became a kind of corporate welfare state. There seemed to be this mentality.
Now I'm looking at the possibilities that are there from the digital realm. But still, even with the Canadian Media Fund being updated, the vast majority is tied to the fact that you have to have a broadcaster, and the broadcaster is going to want 12 years' worth of rights, and he might show it or he might not show it. It's going to be a huge investment because you're not going to run a pilot unless there's a whack of dough there.
Meanwhile, there is this whole other world out there, where we could start getting buzz and hype and things could start happening. I'm interested that you've found the experimental stream full of great ideas. It seems to me odd; it seems that we would say, okay, the experimental stream is over there, it's not the serious stuff, whereas I actually wonder if that's where the real serious stuff is going to be created.
Would you suggest that we actually open up this Canadian Media Fund so that more funding is available to just create content, and then worry about where it goes as secondary to the creation of content, and allow perhaps more of this just to get out there online?
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I have this discussion all the time. It's difficult, right, because it's not a discussion, it's a change. It's happening. If you look at Craigslist, that's local, hyperlocal. We spend all our time talking about hyperlocal.
People don't like to see change. They don't like change. They don't want their TV station to go away. They're used to sitting back and watching the local TV news.
I don't even read the newspaper anymore. I get all my information on Twitter. I'm following probably half of the members of Parliament to see what you are talking about. I know before I even get here who you are. I've been on LinkedIn. I can see all sorts of information. That we didn't have before.
With this whole change, yes, we have to make sure we're taking care of people who are used to that. It just means we need 25-year-olds running the local TV stations, who are interested in TV, but understand social media and are able to connect with the younger and the older.
How do you regulate that? How do you deal with it? Well, the people are deciding, right? Crowd sourcing is where it's at. You decide what the local area wants. And that's what we're seeing on Facebook. People in Fergus, Ontario, don't really care about anything else but what's happening in Fergus, Ontario.
And Moses Znaimer was the first one to do this. It was all about local, local, local. Citytv is a perfect example.
Full disclosure: he hired me out of university.
I built a TV show 17 years ago at Western that was hyperlocal, but I figured out if I did a TV show on the campus, no one else could touch me. I'm just doing what CTV does. No one was allowed to come on that campus and shoot video unless they were a student. I was a student. I made $26,000 a year. I paid for my university by using that exclusionary factor that most of our broadcasters have.
But now that's all changing. Could I do that today? Probably not.
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I think they already are. If you're into a specific kind of music....
We have a house in Toronto and a house in New York. When I'm in Toronto, one of the most multicultural cities, if I would like to go and see Jamaican roots hip hop, I can go and see it. I can't see that in New York, believe it or not. We have one of the most vibrant music communities in the world, and people see us as a real....
I know that friends of mine from New York go to Toronto for bands. Everything goes through Toronto. It's a really good music scene. But if you're into Jamaican hip-hop rap, then it doesn't matter if you live in Canada or you live in Denmark, Sweden, or wherever.
I'm going to give you an example. A stand-up comedian in America was not doing very well on the stand-up circuit, wasn't making any money. He decided to put some of his stand-up on YouTube. He looked at the data and found out he was getting all sorts of people watching it from Sweden and Denmark, in Scandinavia. He went over there, did a tour, and he's huge there now, absolutely massive. I can't remember his name, I'm so sorry, but there's example after example like this. It's about niche.
I am a Canadian, a proud Canadian, but I don't want to watch things made by Canadians. I want to watch stuff I'm interested in. If it happens to be made by a Canadian....
In a lot of the meetings I go to in New York, I'll leave the meeting and say, “Oh, by the way, I'm Canadian”, and four other people will put up their hands and say, “I didn't even know.”
So for me, it's about niche and passion. That's what the Internet has unleashed on us. It doesn't matter about being Canadian. We already lead the world. We've got a great education system. What our government can do is keep those things moving forward, ensure that Canadians have all the things that are basic human rights, and we'll be great.
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I'm so sorry I can't speak better French. It's one of my priorities.
An hon. member: I can tell you where you can learn it in New York.
Mr. Gavin McGarry: I'm in.
No, I'm very embarrassed, as a Canadian; I go to France every six months, to Cannes, and I speak okay French, but I really am embarrassed that I don't speak better French.
At any rate, to go back to your question about being a legislator, that's a very difficult question. I would really need to think about it. If I can get your e-mail, I'll send you an e-mail because I don't really....
We're doing pretty well. Canada is doing okay. We have a great governmental system. We didn't get hit with the mortgage thing because we didn't follow. We didn't go into Iraq because we didn't follow, right? And I think what we're doing right now....
I was talking to some people yesterday saying I was coming down to this, and they said, “You know what? This is so great that they're actually doing this, that they want to hear from people.”
So I think we're doing everything right. In terms of what legislation, I really like the CMF idea of investment, of taking over the VC idea, the venture capital idea, for the government. I think it's new, I think it's innovative, I think it's unique. Do I think it's going to work?
It's difficult when you get the government involved in things like that, but that's what we do best. We're a socialist country. We want to give everyone an opportunity, right?
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I find these conversations fascinating. I want the forward-looking view, and I think that's what you're giving us. You're telling us what's already out there, what's possible, and where the model is going.
I think we do spend an awful lot of time.... I say it every meeting, so I might as well get it out once again: I'm demanding, if I can get it, a review of the Broadcasting Act, because I think we really have to get things squared around not where they are or where they've been but where they're going. The monetization and the opportunities to earn money are so much greater today under the new model than they ever were under the old model, and I think that is something people struggle with.
When Jacob was here, he talked about the long term, and I think that's kind of what you're getting at, that the Internet opens up these opportunities. You're asking students, if they're not making a thousand bucks a month on YouTube, what they're doing, then.
Last night I was in kind of a foul mood. I went home and watched 1980s music on YouTube for three hours just to make myself feel better, but every artist that I watched received a royalty from YouTube. I don't know if people know that they're doing that stuff.
You've said a lot of glowing things about Canada, and I appreciate that, but ultimately what we want to do.... I've said several times that I really think it's about content. Content is going to be king. As for how we get it out there, there are so many platforms. We're still fascinated by radio stations and television stations, but ultimately there are just so many platforms.
I guess this isn't a legislative thing. You also talked about electronic and digital rights for artists. Right now, the reason artists lose that, I think, has to do with the way the Canada Media Fund is structured and that relationship.
Could you give us a piece of information about how we unshackle creators and unshackle artists and make it so that they can see the opportunity that's out there? How would you direct us to do that?
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You can go to our website, Jumpwire Media, and you'll see “Torrent Tracker Reports” there. It will take you through exactly what we're doing with BitTorrent. Also, under my blog, you'll see a video. I just spoke for about for an hour and half at Cannes, and you'll see a good overview of that as well.
I know the CEO of BitTorrent, Eric, very well. He was speaking at the Banff World Television Festival. That's where we met, and that's where I got the idea of trying to get the data off BitTorrent. I called him up and said, “I want your data”, and he said, “I don't keep any data, because we're getting sued every week”.
People are starting to realize that the reason people share content on BitTorrent--and why BitTorrent is so interesting--is that you don't have to pay for it, first. You get the content you want--it's the ultimate lab. And there are only about 100 million people around the world who use it.
Secondly, we did some research. We've been tracking everything since June 2008, when Hulu went up. We tracked all of Fox's content beforehand and afterwards, and we found a decrease in BitTorrent usage once Hulu was available. We're seeing that a lot.
I was at a round table in Ottawa, and it was the same sort of thing. The people were saying they go to websites all the time to watch videos; they were going to MTV. We're starting to see that shift.
The problem is that the broadcasters didn't keep up fast enough. It's expensive to deliver video; they wanted to do it streaming. I had talked to broadcasters three or four years ago and asked why they didn't use BitTorrent.
BitTorrent is the easiest, most efficient way to share files, not illegal content, but to share files, on the Internet. The more people who share it, the easier it is. That's why Napster took off. To understand how BitTorrent works, if you have a piece on your computer, and you have a piece, and three people have a piece, it takes a long time to download, but if you have 3 million people on it, then it's dispersed.
Why some country—and maybe Canada is that country—doesn't do a deal with BitTorrent to say we're going to figure out a way to legislate and monetize this, and we're going to allow BitTorrent in Canada, but you have to pay for it in some way, shape, or form, and even have that exercise....
But I have to preface that by saying...because earlier you were talking about how it—